Omaha daily bee., 1887-12-02
High Rates For Money.

For two or three months past money
has commanded rates which borrowers
have felt to be onerous. The expert
ence has not been confined to particular
localities, but has been general. The
natural conclusion of many has been that
this state of affairs was brought about
by concert OF action among the banks
of the country. A Chicago paper rcfcYs
to business men in that city who have
expressed the opinion that there is
something very like a combination
among the heavy lenders to advance
and keep up the rates of money. Simi-
lar expressions have been made else
where, and the feeling is doubtless as
general as the condition that inspires it.
Plausible arguments in support OF
the theory are not wanting. 1t is
urged that it is for the in
terest Of bankers us class that money
should be scarce and rates of discount
high. Another apparent reason is
found in the possible effect to be pro-
duced in congress favorable to more
liberal legislation in behalf of the
banks, that would enable them to cX
tend their circulation. To demonstrate
the necessity for this, a contraction OF
the bank currency might exert some
force. AS a class bankers are not
friendly to the legal tender circulation,
and it is thought not improbable that n
combination may have been formed to
secure TO the banks the entire paper Cir
culation of the country, which a policy
of contraction might possibly promote.
In a word, the impression of many ap-
pears to be that the banks have come to
| n common understanding in a policy
designed to convince the country that
| in order that it's financial wants shall be
properly cared for these institutions
| must be relieved Of much OF the re-
straint now imposed by Legislation and
freed from the competition of the legal
tender circulation of the government.
There is probably no substantial
foundation for the theory that any gen.
eral agreement exists among the banks
OF the country to make money scarce.
Granting concert of action for this pur-
pose to be practicable, it is not at all prob
able that it could be maintained for any
length Of time. The interests OF in
dividual banks and of all banks in cer-
tain localities would be speedily found
destructive of any such arrangement.
No judiciously managed bank would
for q great while continue a
policy of curtailing the de-
anands of large and profitable customers
at the risk of damaging their business,
reducing their accounts, and perhaps
ultimately losing them as customers.
But there are plain and practical rea-
sons for the scarcity of money which dc
away with any necessity for seeking
others or advancing insubstantial
theories. They are found in the enor.
nous amounts Of capital that have been
invested IN all sorts OF enterprises in
every portion OF the country from many
Of which there have been as yet nc
returns. The circulation of the country
has been increased dering the past yeal
fully seventy million dollars, but thi:
and great deal more has been absorbed
by the vast improvements and enter.
prises projected all over the country
The surprising thing is tha
the rates OF money have not ruled
higher. There is still pressure on the
money market that will doubtless pre-
vent any reduction of rates before Janu
airy. but with the incoming of the new
year lower rates for money may bc reas
onably expected.